After reporting its first-quarter results, the artificial intelligence-assisted lender Upstart (NASDAQ: UPST) has seen its stock rally after providing improved guidance and making some improvements to its business model.

While the quarter was better than expected, I still think the stock trades on a lot of hype due to its success and popularity during 2020 and 2021. The company, in my mind, still has a long way to go to prove its model and concept. Here's why.

Upstart has developed algorithms that it believes can better assess credit quality than traditional loan underwriting methods. In doing so, the company can deliver better loan terms for near-prime borrowers while helping financial institutions find new creditworthy borrowers that they would have never found otherwise.

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Source Fool.com